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As the ECB reduces its monthly purchases under its QE program to 60 billion euros from 80 billion euros starting in April 2017, the initial market reaction was that quantitative easing was going out. This says Barley is not the case, and markets are overreacting. The ECB is now ready to buy bonds yielding less than the deposit rate. The ECB promised to extend purchases to Dec. 2017 or further. Look deeper says Barley and ECB forecasts headline inflation at 1.7% in 2019, less than 2% target. So continued QE made sense but at a lower pace. In the end it is the flow that matters not the stock of purchases, says Barley.

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In 2013 the Greece government of Antonis Samaras made a study of wartime costs incurred by Greece for damaged infrastructure during the Nazi occupation of Greece and Nazil loans forced on Greece between 1942-1944. The estimate exceeded 200 billion dollars. Die Linke, a socialist party in Germany in the European parliament allied to Syriza, also supports debt forgiveness.

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Spain's National Court is looking into the problems at Bankia and the leadership of Rodrigo Rato, a former head of the IMF and Economy minister in the government of Mara Aznar of the Partido Popular. The current prime minister Rajoy was deputy prime minister in the Aznar government which lost the election in 2004.

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Noonan of the WSJ says it is important that cooler heads prevail in the Korean missile crisis. She says it is important that cool and calm voices prevail for the U.S.- the voices of the generals surrounding president Trump- McMaster, Kelly and Mattis. The statements by president Trump are seen as reckless. Any comparison to the Cuban missile crisis with rational players on both sides is refuted by Noonan. Krushchev and Kennedy cannot be compared to Trump and Kim Jong-Un. The U.S. had conversations with Ambassador Dobrynin and Foreign Minister Gromyko of the Soviet Union at the time, the U.S. has no contacts with the North Korean government. The situation is vastly different and as retired Gen. James Thurman, head of U.S. forces in South Korea 2011-2013, points out in a NYT report, the dangers of miscalculation are high.

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Resistance to EU reforms for a Single Sky Plan by controllers and national aviation agencies. The EU Transport Commissioner, Sim Kallas, is pushing the Single European Sky plan. This is being planned for January 2012. With the creation of the Single Sky national barriers would fall, national air traffic bureaucracies would give up powers, and controllers in European countries will have to work more efficiently and may face job cuts. Europe's air traffic system is splintered. There are 39 national agencies, and Eurocontrol with 64 control centers. Europe has twice as many bureaucrats and support staff compared to the U.S. European air-traffic agencies costs per flight are 75% higher than the FAA's, mostly because of labor costs. According to Eurocontrol, air traffic in Europe went up 1% in 2010 over 2009, but delays went up by 34%. Over 40% of scheduled flights in Europe were over 5 minutes late in 2010- the comparable figure for the U.S. is a little over 25%. This splintered situation became an obvious drawback during the volcanic eruption in Iceland, when the lack of a single regulator meant the lack of a common standard. In 2009, the EU presented its own program that would group 32 national agencies into nine units called airspace blocks, which would given the task of breaking down internal barriers and integrating operations A common set of standards for all air traffic agencies would be set, and advanced technology would be used to support safety and efficient flight management. This program is now set for initial implementation in January 2012. As part of this effort European governments like Spain are tackling their high air trafffic controller costs....

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The failure of colleges and universities in the U.S. to control costs and lower the tution burden for parents and students. Student debt crosses $1 trillion in the U.S. in 2012. This is likely to hurt consumption and new home sales and lower the prospects of economic recovery.

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David Autor, an economist at the Massachusetts Institute of Technology, says he is quite worried about the steadily declining participation of men 16-64 in the labor force from 85% in the decade after World War II to less than 65% today. This is a blow to the men, their families , government revenues and the economy.

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The Indian rupee drops to a low of 62.13 in trading on Aug. 16, 2013. The Bombay Sensex index drops by 4%.

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Feldstein points out that Obama economic plans missed the real target, which was on the home front where it came down to addressing the problems of 15 million homeowners under water- with mortgages exceeding the value of their homes- and lack of solutions to deal with the $1.5 trillion in troubled commercial real estate loans. Administration plans really did not help more than a couple of hundred thousand homeowners to reduce their monthly mortgage payments. Getting banks to start lending again by selling impaired loans to nonbank investors, also failed to work, as banks were reluctant to do so and reduce their accounting capital. Health care legislation simply distracted attention from the real problems. See the links to Feldstein's repeated insistence that the new administration (and even during the late stages of the Bush administration) focus on these problems. Health care legislation that passed simply would not control the increase in health care spending, that the public correctly perceived as the real problem if the other health care issues were to be resolved. Instead Obama's health care legislation offered to increase the deficit to unsustainable levels, with no solutions to more pressing home front problems in sight. Feldstein, is one of the most eminent US economists....

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Britain's GDP declined by 0.7% in the second quarter of 2012.

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The U.S. market looks like it is becoming the kind of maturing market that Japan and Germany have become for automobiles. Germany and Japan saw sales peak at high levels and then decline. And they have been declining steadily for several years. The US has a growing population and demographics because of immigration compared to Japan so there wil be continued demand for new cars. However since 2000 carmakers have introduced so many price incentives, interest free loans, and other ways of pushing sales that sales have continued to climb to unsustainable levels. All through the 1990's sales were in the 15 million range, then after 2000 sales climbed, except for the short period of uncertainty after 9/11/2001 Trade Center bombings. Sales climbed up to 17 million and stayed at these higher levels till the recent crises in 2007 saw a drop in sales and a shift to smaller fuel efficient cars. GM was offering 0% financing for 5 years through its Keep America Rolling campaign in the aftermath of 9/11. By 2005 automakers were offering as much as $8000 in discounts on pickup trucks. Employee pricing enabled regular customers to buy at employee prices. The Big Three sold to rental fleets unsold cars, so much so that by 2005 25% of all vehicles made by GM and Ford went to rental fleets, to rental companies in which these companies had large ownership stakes. For GM this became part of strategy. Fixed costs were high and the UAW contracts made it difficult to layoff workers, a jobs bank in which layed off workers could remain till rehired was itself quite costly as money had to be paid to the workers in the job bank. With this kind of inflexibility in the labor market GM could only spread all the fixed costs for its aging workforce which required pension payouts to retirees and health payments to retirees, by selling more automobiles. During this period of inflexibility in labor, and the legacy costs of previous boom years since the 1950's with generous UAW contracts, GM and Ford pushed sales to unsustainable levels; without considering the furture implications of this short term strategy. Another way this could hurt is by pulling sales in future years into current years because of interest free financing or huge discounting which probably happened in 2004-2005 and is seeing a payback today in 2008. At the peak in 2005 carmakers were planning further expansion of SUV capacity or expansion of other carmaking facilities. Gas was still not at the high levels of today. In 1999 gas cost $1.15 cents a gallon, and it was a little higher than that, but nowhere near what we are seeeing today. These new plants are coming up just as the sales are dropping dramatically, the half million SUV's sold in 2008 is about half the sales in 2003, enough to fill 2 plants when many more plants are being built or opening. The new capacity of 4 plants capable of producing 1 million vehicles is looking like a big mistake, like the new Toyota Tundra plant in Texas. Some of the new carmaking capacity is a Toyota plant in Tupelo, Mississippi, a Honda plant in Indiana, and a Kia Motors plant in Georgia. All this means a big drop in factory utilization rates. GM has 2 plants making full size SUV's. Later this year GM will cut production at these plants and at 2 plants making pickup trucks to utilize them only for 1 eight hour shift a day. Toyota has 1 full plant of excess capacity, not including the plant opening in Tupelo, Missisippi, making it likely to be down in utilization very significantly as well. Nissan is only using 65% of capacity at plants in Canton, Mississippi and Smyrna , Tennessee. And these utilization rates reflect the impact at the early stage of the housing crisis, consumption spending is only now beginning to bite, and unemployment is still to take a hit, so th economic recession immpact is still not reflected in auto sales. Even now GM and Chrysler cling to the hope of a sales pickup in late 2008 and in 2009, which is looking less likely by the day. J.D. Powers survey show the North American auto making capacity at 18.7 million cars and production this year at 14.1 million. This means the automakers have disastrously misjudged the auto market, and the role their own actions in pushing sales have affected the market in inflating the sales numbers beyond what is a sustainable sale increase. When credit tightening and lower consumption spending, housing crisis, and higher unemployment all hit the US in full impact by 2009 the situation is likely to worsen significantly and could become a disaster. ...

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The new coalition government of prime minister, Antonis Samaras, will ask for a two year extension for meeting deficit targets from the March 2012 deal with the IMF, EC and ECB. The new coalition will also not make any large layoffs and only reduce the size of the public sector by attrition and retirements, a key condition of the Democratic Left partner in the coalition. This is one of the demands as part of the loan package to Greece. Since the beginning of the crisis the public sector has declined by 10% in Greece to 700,000. By 2015 the public sector is expected to lose another 150,000 workers by attrition.

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Loukas Tsoukalis, professor of European Integration at the University of Athens and the president of the Hellenic Foundation of European and Foreign Policy, provides a view of the debt crisis from inside Greece. A default on Greece's debt of $500 billion would seriously affect other European countries and also affect the U.S. Tsoukalis says a national unity government is needed to take the bold steps that are needed to privatize state assets, cut public sector jobs and increase tax collection. Growth is critical, as an austerity program that fails to do this will fail to pull Greece out of the debt crisis. He calls for agreement on the question of who should bear how much of the cost for the mistakes of the past, taxpayers and private creditors. Discussions on this question are being undertaken by governments and private creditors as the crisis enters a new and dangerous phase. And for the countries involved in this crisis - Ireland, Portugal, Spain - there is the question of what will happen after two decades of European integration, whether these achievements will be undermined by excessive borrowing, consumption and poor financial management....

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Eisinger says the Volcker Rule is voluminous and complex with 530 pages, because banks and lobbyists with complicit regulators wanted it that way. This is also what Volcker told Charlie Rose in an interview, that banks can't complain that it is complex and at the same time work to add complex language to the rule.